Could AOL be in a death spiral? It could be, but it isn’t. AOL has become the preferred whipping boy for Wall Street and tech bloggers alike. CEO Tim Armstrong is no doubt betting big on HuffPo’s content strategy — and it’s a good gamble.
The Huffington Post had 4.8 billion page views in 2010, per Quantcast. HuffPo’s current base is college educated, 35-49 and 66 percent earn $60,000 or more. A majority are childless professionals, according to Quantcast, a spendy group that composes the bulk of luxury goods sales. That’s comparable to metrics for Forbes.com and slightly more affluent in terms of consumers than last year’s data for Netflix.com.
Although at first glance it might seem like a gaggle of left-leaning political gossip and factoids, only about 15 percent of HuffPo’s coverage, according to the site, is actually breaking news. The remainder of HuffPo’s content holds significant crossover potential. Kim Kardashian’s love woes, liberal-conservative cat fights and cute babies mixed with hard news have enormous viral strength and rack up clicks for any site.
HuffPo not only gets SEO, but it’s one of the best publishers in getting traffic from social sources. HuffPo now has access to a much larger general audience. How much larger? 270 million per month globally. HuffPo is already making a healthy $30 million in advertising revenue, primarily from display. That’s nearly 70 percent of Twitter’s advertising revenue last year. AOL’s got a seasoned sales team that will make that grow quickly.
That brings us to video. AOL has a lot of it, and they are preparing to produce and license more. The innocuous looking AOLTV website is now hosting AOLTV “Exclusives”, a cornucopia of gossipy celebrity sound bytes. AOL’s existing content partner Access Hollywood is produced by NBC, and NBC was until last year a part of the group that owns Hulu.That group, which still licenses content from NBC for Hulu, now includes Comcast, Fox’s News Corp and ABC. Fox, ABC and NBC and Comcast are a powerful combination. It is the same troika of networks that refused play footsie with Google TV’s platform last year.
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AOL could launch a network-TV platform that combines the news candy, celebrities and analysis format of HuffPo. That would drive display revenue and premium content to an online format that features paid-access and high mobile content viewship. A hint might be AOL’s promotion of Access Hollywood Live, a spin-off of Access Hollywood. The show is a Facebook and Twitter-connected live program that exists online, via syndication and as an iPhone app and which features Hollywood events and celebrities calling in live to dish and mourn. The show has been picked up by NBC and Fox affiliates.
AOL is quietly making inroads with Hollywood talent. It has inked deals with Heidi Klum and Queen Latifah. They both sport long-term endorsement contracts from major brands like Cover Girl as well as recent histories as successful niche TV and film producers with cross-over appeal. AOL’s deal will allow them to produce and star in original web series for the AOL Network, reportedly covering sports, entertainment, and business, and to create original video-laden websites around their substantial fan followings. That means AOL will effectively be able to give YouTube a run for its money with talent creating AOL and sponsor-branded content that can live on mobile, Facebook and on any other device that can catch a wi-fi signal.
That also means that rich immersive display on apps and on AOL web properties won’t be far behind. Both women come with some substantial Hollywood content partners, such as Disney, HBO and Vh1 on Latifah’s part, and that can’t hurt AOL’s multi-platform strategy. Both women also have a range of spin-off products, ranging from clothing lines to makeup, as well as former retail affiliations, such as Victoria’s Secret, which could create mobile drive to and from anchor brand sites as well as create co-branded content.
AOL didn’t make a mistake. HuffPo was a smart, albeit expensive, deal. AOL is willing to pump dollars into a business model, built on inexpensive, premium content that has generated enormous traffic increases for the anchor website. That isn’t an outlandish idea. It’s certainly not not evidence of AOL’s “distracted doom”, as one pundit put it. The market, sometimes, is wrong.